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There's lot of stuff in the media at the moment about all the pensions changes; and there is likely to be more after the budget.

These new freedoms are really important to the individuals affected by them. But they do not really impact what is the critical pensions question for most people today.

One of the best articles on pensions I have ever read was by.............Jeremy Clarkson. His view was that, for many, given the choice between spending £1 in the pub tonight, or having £5 to spend, in 30 years time, when you're 75, on a better medical aid, they'd spend the £1 tonight. This goes to the heart of the issue - spender or saver? Most of us, deep down, are one or the other.

I remember, when I was much younger, one of the girls that I worked with took all of the bonus that she received and put it in an Advanced Voluntary Contribution into her pension. She was in her mid-20s. Another chap religiously put as much money as he could in his PEP (which became his ISA) each year. Personally, as a spender, this was really hard to understand.

Of course now, nearly 30 years on, they'll be sitting pretty. Many would say that they have no money to save; but most could spend that little bit less and save, if they wanted to. So, with few expecting a decent pension from the government in the decades to come, the real pensions challenge is to turn more of us spenders into savers.

I'm sure that George Osborne would argue that the greater freedoms will encourageSavings Image more pensions saving. It might. A bit.

But I have long thought that the only way to deal with this matter properly is to require spenders, in fact everyone, to save into their own pensions pot. This works well in some other countries. It has to really be the individuals' money taken out of their earnings. Not the government's money, in an amorphous pot, in the way that national insurance disappears. In your own, individual account.

Politicians doubtless are fearful that it would be seen as yet another tax but in the end this will have to happen. The country won't be able to afford anything else in the long run.

Whichever government bites the bullet on the issue will probably be seen in 30 years time as having done something as important as the establishment of the NHS.

By Mark B

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